COBS 5

Distance communications

COBS 5.1

The distance marketing disclosure rules

Application

COBS 5.1.-1

See Notes

handbook-rule
  1. (1) This section applies to a firm that carries on any distance marketing activity from an establishment in the United Kingdom, with or for a consumer in the United Kingdom or another EEA State.
  2. (2) If a firm is an intermediary rather than the supplier under the distance contract, references to 'firm' in COBS 5 Annex 1 R and COBS 5 Annex 2 R are to be interpreted as referring to the supplier except for references to 'firm' in COBS 5 Annex 1 R (2), (4) and (18).

The distance marketing disclosure rules

COBS 5.1.1

See Notes

handbook-rule

A firm must provide a consumer with the distance marketing information (COBS 5 Annex 1R ) in good time before the consumer is bound by a distance contract or offer.

[Note: article 3(1) of the Distance Marketing Directive]

COBS 5.1.2

See Notes

handbook-rule

A firm must ensure that the distance marketing information, the commercial purpose of which must be made clear, is provided in a clear and comprehensible manner in any way appropriate to the means of distance communication used, with due regard, in particular, to the principles of good faith in commercial transactions, and the legal principles governing the protection of those who are unable to give their consent, such as minors.

[Note: article 3(2) of the Distance Marketing Directive]

COBS 5.1.3

See Notes

handbook-rule

When a firm makes a voice telephony communication to a consumer, it must make its identity and the purpose of its call explicitly clear at the beginning of the conversation.

[Note: article 3(3)(a) of the Distance Marketing Directive]

COBS 5.1.4

See Notes

handbook-rule

A firm must ensure that information on contractual obligations to be communicated to a consumer during the pre-contractual phase is in conformity with the contractual obligations which would result from the law presumed to be applicable to the distance contract if that contract is concluded.

[Note: article 3(4) of the Distance Marketing Directive]

Terms and conditions, and form

COBS 5.1.5

See Notes

handbook-rule

A firm must communicate to the consumer all the contractual terms and conditions and the information referred to in the distance marketing disclosure rules (COBS 5.1.1 R to COBS 5.1.4 R) on a durable medium available and accessible to the consumer in good time before the consumer is bound by any distance contract or offer.

[Note: article 5(1) of the Distance Marketing Directive]

COBS 5.1.6

See Notes

handbook-guidance
A firm will provide information, or communicate contractual terms and conditions, to a consumer if another person provides the information, or communicates the terms and conditions, to the consumer on its behalf.

Exception: distance contract as a stage in the provision of another service

COBS 5.1.7

See Notes

handbook-rule

This section does not apply to a distance contract to deal as agent, advise or arrange, if the distance contract is concluded merely as a stage in the provision of another service by the firm or another person.

[Note: recital 19 to the Distance Marketing Directive]

Exception: successive operations

COBS 5.1.8

See Notes

handbook-rule

In the case of a distance contract comprising an initial service agreement, followed by successive operations or a series of separate operations of the same nature performed over time, the rules in this section only apply to the initial agreement.

[Note: article 1(2) of the Distance Marketing Directive]

COBS 5.1.9

See Notes

handbook-rule

If there is no initial service agreement but the successive operations or separate operations of the same nature performed over time are performed between the same contractual parties, the distance marketing disclosure rules (COBS 5.1.1 R to COBS 5.1.4 R) will only apply:

  1. (1) when the first operation is performed; and
  2. (2) if no operation of the same nature is performed for more than a year, when the next operation is performed (the next operation being deemed the first in a new series of operations).

[Note: recital 16 and article 1(2) of the Distance Marketing Directive]

COBS 5.1.10

See Notes

handbook-guidance

In this section:

  1. (1) 'initial service agreement' includes the opening of a bank account and the concluding of a portfolio management contract;
  2. (2) 'operations' includes the deposit or withdrawal of funds to or from a bank account and transactions made within the framework of a portfolio management contract; and
  3. (3) adding new elements to an initial service agreement, such as the ability to use an electronic payment instrument together with one's existing bank account, does not constitute an 'operation' but an additional contract to which the rules in this section apply. The subscription to new units of the same collective investment scheme is considered to be one of 'successive operations of the same nature'.

[Note: recital 17 of the Distance Marketing Directive]

COBS 5.1.11

See Notes

handbook-guidance

In the FSA's view, other examples of:

  1. (1) 'initial service agreement' include:
    1. (a) subscribing to an investment trust savings scheme; or
    2. (b) concluding a life policy, personal pension scheme or stakeholder pension scheme that includes a pre-selected option providing for future increases or decreases in regular premiums or payments; and
  2. (2) 'operations' include:
    1. (a) successive purchases or sales of shares under an investment trust savings scheme; and
    2. (b) subsequent index-linked changes to premiums or increases or decreases to pension contributions following fluctuations in salary.

Exception: voice telephony communications

COBS 5.1.12

See Notes

handbook-rule

In the case of a voice telephony communication, and subject to the explicit consent of the consumer, only the abbreviated distance marketing information (COBS 5 Annex 2R) needs to be provided during that communication. However, a firm must still provide the distance marketing information (COBS 5 Annex 1R) on a durable medium available and accessible to the consumer in good time before the consumer is bound by any distance contract or offer, unless another exception applies.

[Note: articles 3(3)(b) and 5(1) of the Distance Marketing Directive]

Exception: means of distance communication not enabling disclosure

COBS 5.1.13

See Notes

handbook-rule

A firm may provide the distance marketing information (COBS 5 Annex 1R) and the contractual terms and conditions in a durable medium immediately after the conclusion of a distance contract, if the contract has been concluded at a consumer's request using a means of distance communication that does not enable the provision of that information in that form in good time before the consumer is bound by any distance contract or offer.

[Note: article 5(2) of the Distance Marketing Directive]

Distance marketing: other provisions

COBS 5.1.14

See Notes

handbook-rule

If, at any time during the contractual relationship, a consumer that is a party to a distance contract asks a firm:

  1. (1) for a paper copy of the terms and conditions of that contract; or
  2. (2) to change the means of distance communication used;
the firm must provide that paper copy or change the means of distance communication used, unless (in the latter case) that would be incompatible with the contract or the nature of the service provided.

[Note: article 5(3) of the Distance Marketing Directive]

Unsolicited services

COBS 5.1.15

See Notes

handbook-rule
  1. (1) A firm must not enforce, or seek to enforce, any obligations under a distance contract against a consumer, in the event of an unsolicited supply of services, the absence of reply not constituting consent.
  2. (2) This rule does not apply to the tacit renewal of a distance contract.

[Note: article 9 of the Distance Marketing Directive]

Mandatory nature of consumer's rights

COBS 5.1.16

See Notes

handbook-rule

If a consumer purports to waive any of the consumer's rights created or implied by the rules in this section, a firm must not accept that waiver, nor seek to rely on or enforce it against the consumer.

[Note: article 12 of the Distance Marketing Directive]

COBS 5.1.17

See Notes

handbook-rule

If a firm proposes to enter into a distance contract with a consumer that will be governed by the law of a country outside the EEA, the firm must ensure that the consumer will not lose the protection created by the rules in this section if the distance contract has a close link with the territory of one or more EEA States.

[Note: articles 12 and 16 of the Distance Marketing Directive]

COBS 5.2

E-Commerce

Application

COBS 5.2.1

See Notes

handbook-rule
This section applies to a firm carrying on an electronic commerce activity from an establishment in the United Kingdom, with or for a person in the United Kingdom or another EEA State.

Information about the firm and its products or services

COBS 5.2.2

See Notes

handbook-rule

A firm must make at least the following information easily, directly and permanently accessible to the recipients of the information society services it provides:

  1. (1) its name;
  2. (2) the geographic address at which it is established;
  3. (3) the details of the firm, including its e-mail address, which allow it to be contacted rapidly and communicated with in a direct and effective manner;
  4. (4) an appropriate statutory status disclosure statement (GEN 4 Annex 1 R), together with a statement which explains that it is on the FSA register and includes its FSA register number;
  5. (5) if it is a professional firm, or a person regulated by the equivalent of a designated professional body in another EEA State:
    1. (a) the name of the professional body (including any designated professional body) or similar institution with which it is registered;
    2. (b) the professional title and the EEA State where it was granted;
    3. (c) a reference to the applicable professional rules in the EEA State of establishment and the means to access them; and
  6. (6) where the firm undertakes an activity that is subject to VAT, its VAT number.

[Note: article 5(1) of the E-Commerce Directive]

COBS 5.2.3

See Notes

handbook-rule

If a firm refers to price, it must do so clearly and unambiguously, indicating whether the price is inclusive of tax and delivery costs.

[Note: article 5(2) of the E-Commerce Directive]

COBS 5.2.4

See Notes

handbook-rule

A firm must ensure that commercial communications which are part of, or constitute, an information society service, comply with the following conditions:

  1. (1) the commercial communication must be clearly identifiable as such;
  2. (2) the person on whose behalf the commercial communication is made must be clearly identifiable;
  3. (3) promotional offers must be clearly identifiable as such, and the conditions that must be met to qualify for them must be easily accessible and presented clearly and unambiguously; and
  4. (4) promotional competitions or games must be clearly identifiable as such, and the conditions for participation must be easily accessible and presented clearly and unambiguously.

[Note: article 6 of the E-Commerce Directive]

COBS 5.2.5

See Notes

handbook-rule

An unsolicited commercial communication sent by e-mail by a firm established in the United Kingdom must be identifiable clearly and unambiguously as an unsolicited commercial communication as soon as it is received by the recipient.

[Note: article 7(1) of the E-Commerce Directive]

Requirements relating to the placing and receipt of orders

COBS 5.2.6

See Notes

handbook-rule

A firm must (except when otherwise agreed by parties who are not consumers):

  1. (1) give an ECA recipient at least the following information, clearly, comprehensibly and unambiguously, and prior to the order being placed by the recipient of the service:
    1. (a) the different technical steps to follow to conclude the contract;
    2. (b) whether or not the concluded contract will be filed by the firm and whether it will be accessible;
    3. (c) the technical means for identifying and correcting input errors prior to the placing of the order; and
    4. (d) the languages offered for the conclusion of the contract;
  2. (2) indicate any relevant codes of conduct to which it subscribes and information on how those codes can be consulted electronically;
  3. (3) (when an ECA recipient places an order through technological means), acknowledge the receipt of the recipient's order without undue delay and by electronic means; and
  4. (4) make available to an ECA recipient, appropriate, effective and accessible technical means allowing the recipient to identify and correct input errors prior to the placing of an order.

[Note: articles 10(1) and (2) and 11(1) and (2) of the E-Commerce Directive]

COBS 5.2.7

See Notes

handbook-rule

For the purposes of COBS 5.2.6 R (3), an order and an acknowledgement of receipt are deemed to be received when the parties to whom they are addressed are able to access them.

[Note: article 11(1) of the E-Commerce Directive]

COBS 5.2.8

See Notes

handbook-rule

Contractual terms and conditions provided by a firm to an ECA recipient must be made available in a way that allows the recipient to store and reproduce them.

[Note: article 10(3) of the E-Commerce Directive]

Exception: contract concluded by e-mail

COBS 5.2.9

See Notes

handbook-rule

The requirements relating to the placing and receipt of orders (COBS 5.2.6 R) do not apply to contracts concluded exclusively by exchange of e-mail or by equivalent individual communications.

[Note: article 10(4) and 11(3) of the E-Commerce Directive]

COBS 5 Annex 1

Distance marketing information

See Notes

handbook-rule
This Annex belongs to COBS 5.1.1 R (The distance marketing disclosure rules)

COBS 5 Annex 2

Abbreviated distance marketing disclosure

See Notes

handbook-rule
This Annex belongs to COBS 5.1.12 R